you for being one of the few true voices for we the people, we try. and lou wrote in, g.o.p. asked president obama to make since, i would ask the same of the g.o.p. to tell you the truth, debra said your chalk talk was great last night, neither side is doing anything to reduce debt or spending, that is the truth. thank you for being with us, be with us tomorrow night, please. good night from new york. neil: welcome. coming to you from our nation capital, we're 20 days away we do not have a deal. that plight be a misnomer the 20 day thing, we could be a couple days from a deal that has to be in place to get the all of the wheels in motion.

to get it voted on. so deadline meeting more than 48 hours, not the three weeks you hear, i am neil cavuto, that is what is at stake, markio rubio knows well what is at stake. with me later. looking at how middle class stands to lose if we push this to the brink, despite what the president said yesterday in michigan, talking up a deal that targets the rich to pay more, marco rube grow said, do you -- rubio said do you that you kill the middle class. he is coming up with me right now and richard shelby, republican senator from alabama. and senator, very good to have you. >> thank you. neil: it looks like it does come down to the wire, but i did not realize how much. you would have to get a lot done in the next couple days, how likely is that? >> we never know here, there

they are beginning to talk, then there are no talk. but it will take time even if there a deal, a lot of us would like to see what a deal is. what it does to the american people. what it does to the american economy. we have not seen any technologies yet. we hear a lot of stuff. neil: you are not one to say, just run something by me and i'll sign it, you want to see. >> i want to see it. neil: that takes time. >> if it is more taxes more spending, and more borrowing, i want nothing to do with it. neil: you say more taxes, does that include, you know, reigning in deducts, write-offs, and special breaks allowances. that seems to be what speaker boehner has alluded to -- you don't like that either? >> i don't like that if we could lower individual rates. i have advocated ta tax reform, cut until we get fundamental tax

reform, let's lower their rights. neil: okay. that does not seem to be in the offing. the first deal we're told is that one -- taxes on upper income will go up whether they are rates or limiting their deductions is that a fore gone conclusion to your colleagues? do you see this as the case, despite what you believe? >> i'm not sure, we had a few republicans speak out, and say we want a deal at just about any cost. you should not negotiate in public. i would like to see what a real core caucus would do on anything, i am going to oppose any rise in people's income tax. i've seen that movie before, it will come back, if it a year or two it is more taxes and it will get to middle class. big time. neil: so one thing that comes up

is history, every time republicans have agreed to look at revenues and move on revenues, whether during ron a ronald reagan or bush sr., the other part did not materialize, that is what you are worried about? >> absolutely, i was here before, i was here during the reagan years as a congressman, the cuts never came. neil: you want them concurrently whatever deal you have. with that? not a promise down the road? >> we have to, otherwise we'll be just like greece and half of europe. neil: some say we'll be like greece if in is no deal by the end of the year? >> i do not agree. we have to negotiate, the president needs to get involved. neil: the language changed a

little bit today, i notice when they are not attacking each other out in open, then progress must be being made. that is what led to rumors of a potential imminent deal yesterday. now they are back to sniping, speaker boehner and nancy pelosi and others going back and forth, that leads me to believe that things are falling apart, do you get that sense? >> we see here -- hear they are negotiating, we'll get a deal, then we hear the fighting going on, if the fighting continues, we're not getting a deal. i don't want a deal if it is just the same old deal that is not good for america. neil: do you worry, as i guy has been around the neck of the woods for a few years, that republicans are losing their verve. some more conservative members have said we lost an election but we did not lose everything that we stand for, yet,

everything i hear talked about, are concessions on part of the republicans about revenues, but not so much about spending cuts, where does that put us. >> if we lose our core principle, reigning in spending and creating, be the job creators we'll lose our way the republicans. neil: you don't see the makings of a deal? we're tries to get a sense of the structure right now. you have to have the broad outline of the deal within a couple of days, anything later, gets to belongisticly -- logistically impossible to be done by the end of the year. >> i think you are right oif there is an agreement, it will take days to work it through, details. neil: you know. republicans get blame, if we tall off this cliff. do you agree with that? >> i'm not sure. i think if we tal fall off the f

that is a term that chairmen bernanke made up. taxes could go up, and president could pay for it. neil: under his - watch you hava recession. >> that is not good for the president, he could over play his hand. neil: do you think he is? >> i think he is right now, whether we will make up for it and get real we'll see. neil: nancy pelosi said today, that what is speaker boehner whining about, pair praising here. -- paraphrasing here. he says, well, that is a separate deal from this deal, do you agree that trillion in cuts she alluded to is part of last time you were on brink should be counted again. >> absolutely not that is is like double counting, this administration is trying to do a lot of double counting. it does not work that way, that

is bad accounting. neil: it is not that to me. >> i do not want to double count anything. neil: thank you senator very much, if senator is right, you heard it, that time is wasting, this is not an end of the year dial, maybe an end of the week deal at the latest. to get something together there is a process. getting iting it out to a vote. so, just looking at calendar it is tough, and marco rubio said, what they are talking about comes to passin. it is going to woul wallop the e class, he would not be keen on it. >> the read from billionaires

saying, you know we're not paying enough in taxes, even when we're dead. the push to bring the estate tax hire back to life. after this.

neil: by the way, there is something more guaranteed in life than just death and taxes, it is taxes after death, and a lot more, there is a move afoot by a number of millionaires led by a an eclectic group led by bl gates' father. level at which it would kick in would drop. at a million bucks you will see it felt, a lot say, make the limit lower, and make rate higher. darrell issa is joining me now,

he heard this and said oh, my goodness, how likely is this. >> i think there are so many self-hating billion airs,. neil: they really do. >> i don't know where their guilt came from. perhaps we could look more clearly how they made their money, estate tax is one of those taxes that is always easy prey, but think about who pays. family farmer whose land is worth $20 million, even if it makes 300,000 a year, the next generation, does not farm, they sell it off, so, the idea that you are not hurting anything looking atlanta least entrenched business is missing point of very family businesses that are under attack with the tax -- >> it might be a moot point, i think this, correct me if i'm wrong, i think this is one of the surprising grenades in these talks that could anymore than it standing to go up, and while

these gentlemen, say, they will raise a lot of money, you argue it could boomerang. >> as you raise money, you kill successive businesses, you can't pass them to your children, because they can't borrow enough to do this. there is a fairness issue, if you take the deduction to zero go ahead, have everyone's estate open to a tax, you discover that americans do not believe in this tax, they believe they will not pay it. neil: they didn't think they would pay it because right now, it kicks in 5 million for an individual, and 7 million for a couple. that would revert to? >> 1 million, if they have their way it would go lower. maybe it should because maybe, problem here in washington, is the problem we're not all in this together, we're deciding how to raise 40 billion off of 2% of america, when we have a tritrillion dollar deficit.

president wants a stimulus, at a time where we have a tril trillion dollar deficit, the real solution. the one that speaker boehner is working hard for, we're in it together. we're taxed too little or spending too much or a combination of the two, if we do it, it has to be 100%. neil: do you believe we're taxed too little? >> in some cases dollar taxes that could be different, speaking for myself, from 20% to 15% on capital gains that is not change my considering on capital gains. i am a . >> you are open to the investor-related taxes that go up with this plan? >> i believe that -- >> not income related ? >> i believe that at zero tax you get no revenue, at 100% tax

you get no productivity. you are trying to find is what maximum revenue to government is, including maximum economic growth. neil: you would be open to speaker boehner offering the 800 billion in revenue, however that is sorted out, he does not want rate hikes, he wants a limit on deducts and write-offs, would either be fine with you? >> neil, we have a lot of hidden things in tax code. i can take a building and put a new roof, as long as i stay under a certain level. neil: democrats saying that is a nonstarter. >> i think it has to be both, they all have to be on the table. but rates are a question, if you raise the rate do you lower economic activity, do you lower the ability for person who works for a company with 20 employees.

worse, than that, they may lower the number of employees because they cannot afford the growth they might otherwise have. neil: right or make it part time, is it your sense we'll have a deal? >> i want be to an optimist, i want to believe that president does not want to hurt this country, at the end of the day he will take a reasonable combination that gets us part way down the road with a promise we'll keep working on it. neil: maybe me wants it to go over the cliff and start from scratch. >> if he's $538 billion worth of tax increases, at least we're in it together, then we can have a discussion, that does take care of half of the deficit, but this is a shock to a lot of people, whose tax plans and life planning, counts on that 2 to 4,000 they have been not paying in taxes, but at least, i say

one last time, at least we would all be in it together,. neil: everyone was on the titanic that did not work out so well. >> you know, united we stand, divided we fall, i believe americans should be unite uniteo take care of the deficit, and solution should be about all of us sharing in that. neil: thank you very much. one of the more powerful figures here in washington, he will have a big role in deciding whether we do get that that brink or not. marco rubio, worried about the same thing, that is measure would be a job killer, is a bad deal actually better than no deal? markio ruscho said when -- marco rubio said when it comes to the jobs at stake no way. >> and that means 200,000 jobs

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neil: it comes down to the rich paying more. the question is how much more. don't let anyone fool you, taxes are going up on the upper income, but the question is how much. marco rubio said when you go after the rich, you might as well go after everyone. >> first of all, what president said it does is not what it does, he is not shooting trait on what his proposal does. a group came out. they found, president's tax increase goes through there will be a million small businesses in

america that pay higher taxes, and means 200,000 jobs will be destroyed, you will get 8 or 9 days worth of government spending. so you are willing -- >> you talking about 85 billion. >> yeah, are we willing to trade 8 days worth of government spending in exchange for killing 200,000 jobs, that does not sound like a good trade off, that is why the president's idea is so bad, it raises taxes on small business, he should fix it he should stop saying this is about billionaires and millions, they can take care of themselves, this is about small businesses, imagine if you are a paralegal, at a small law firm with one lawyer. they are going up next year, they will have to find that tax increase from somewhere, this is be from your job, or income or benefits, that kills smals midde

class in the small businesses. neil: do you think this is a strategic mistake to put on the table 800 billion worth of rrvenues. >> we're not against revenues, but the question is how do you generate that revenue, president thinks you generate that revenue through tax increases, his tax increases do not. they will kill jobs, you will not collect the money he claims it will, i think way that generate new revenue is economic growth, someone right now is unemployed they are not paying income tax, but if they have a job next year, they are paying income tax, that is revenue for government. economic growth is the only way to solve our problem. we cannot tax our way out or cut our way out, only solution is combination of fiscal discipline, hold the line on spending and rapid economy

growth through extension of energy sector and pro growth strategy from government. neil: it seems inevitable that tax increases will be a part of the deal, whether a return to clintonnary top rates or -- era top rates or something in between oadjusting deductions or write-offs, but one way shape or form, taxes on the upper income will rise. >> it does not make sense, first of all, taxes are already going up on everyone, because of obamacare, when you add to that the tax increase that president is proposing, the rates are much higher than clinton era. >> you would go against what boehner has been saying. >> i do not know, i will not undermine what he said, i am saying this does not make sense, taxing will be higher. and president is proud of the

unemployment. labor pool shrank. so, if unemployment went down, under existing tax rates, why would we raise taxes if president believes that jobs are being created and the economy is growing with the current tax rates why would he risk that by changing the tax rates. that is why this makes no sense to me, it makes no sense other than he wants to score a victory for the left-wing base of his party and put a trovey iy -- try in his trophy case, that is not good policy. neil: so, let's say that income is raised, are you saying that mashi -- marco rubio would be against going? >> i am dead set against it.

here is why that is so official, if the rates go up, because president refuses to budge, he will have to answer for that next year whether the economy is not grow, those who work at a dental office as a billing specialist, they lose their jobs or the paralegals, these are part of those who will lose their jobs if the president's tax increase goes through, if that happens, barack obama will be responsible, but i will not becomnotbecome -- come comment e economy. i do not want us to go off the fiscal cliff, congress created in a bipartisan way this is the result of the last fiscal cliff. neil: both sides agreed.

>> i voted against it, it was a bad idea, why create artificial crises to force action. neil: they did. >> now the country -- now they want to do it again, now let's hurt growth in economy, and cut a deal that hurts growth,o from a year from now we'll have a worse fiscal cliff. we have a 16 trillion-dollar debt. these tax increases do nothing to self, you have 200,000 less jobs next year for, that those who vote for that will be held responsible for that decision. neil: is it terrible public policy if you leave off the table. what accounts the majority of spending off the table. if you leave out medicare, and medicaid, and don't even pry to bridge up -- try to bring up social security, 8 democratic members and congressmen marked

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>> the cuts to medicaid are not the solution. medicaid and medicare, we can discuss that later. don't make medicare and medicaid a part of this fiscal reduction program. >> we're not budging on medicare, and we're not budging on medicaid. >> all of us need to be focused on protecting medicaid. >> we're here to say, no, to slashing and decimating cuts in medicaid. neil: all right. you heard them. eight democrats of the house and senate today saying there's no debating this whether it comes

to getting us off the cliff. do not throw entitlement cuts to medicare or medicaid and social security. with so much off the table, what is left on the table? just as low to trim defense. running out of options senator bloomenthal with me now. limiting the pie? >> not at all, neil. there's significant cuts to be made in health care costs. for example, $500 billion or more in health care cuts. that's only 4% of the 12 trillion to spend over the next decade. cutting unnecessary waste -- neil: not medicare or medicare, but out of something else? >> they would reduce the costs of medicaid aeromedicare in sensible ways that affect the country.

everybody knows health care costs are spiraling out of control. some examples, right now, medicare does not negotiate the prices of pharmaceutical drugs. the veterans' administration does, why not medicare? cut the hospital of required diseases requiring health care costs in that way. the affordable care act not only envisions and requires in certain ways cuts in the cost of health care spending -- neil: suspect that the same as republicans saying don't raise rates. you don't like when republicans do it, you don't like when they say leave entitlements off the table. >> we have to do both. neil: but we're not doing both. >> well, that's what the challenge is ahead. i'm more hopeful than ever we can reach a deal -- neil: are you really? after this, i'm not. when you and your colleagues say, senator, look, don't touch entitlements. first of all, limiting the growth in the program is not a cut.

if you loathe doing that, for maybe all the right reasons, and, again, as i said, republicans on defense, again, for maybe all the right reasons, that leaves you with tax hikes on the rich, for now, this immediate deal, leading me to believe it's a lousy deal. >> well, first of all, raises taxes for the wealthier 2% is something that i think there's growing acceptance has to be done -- neil: say you're right on that, agree or disagree on the premise. $80 billion this year. best case scenario, eight days of running the government. >> back to what i said before which i think is an important understanding. there's ways to cut the costs of health care spending. the right way to do it is to cut unnecessary spending through -- neil: but i'm looking at my watch and date and time saying, time's a wasting to do this. do you think that both sides can come to an agreement on the numbers where we avoid this

precipice at the end of the year? >> one of the most hopeful signs that we can is the fact there's less public rhetoric coming from both sides -- neil: there was some today; right? speaker boehner exasperation with the president not coming up with cutss nancy pelosi saying, you know, republicans have not really been truthful in these negotiations. i could go on and on, but the fact they were, you know, griping at each other today leads me to believe the deal is not imminent, but i could be wrong. >> i agree with you, not imminent, but certainly far from impossible, and the reason i say there's growing hope is not only that more republican leaders and respected members of the united states senate saying we need to move in this direction, but also -- neil: also say move in the direction with the balance and cuts. >> the business community is

coming forward to talk about specifics and to support people talking about the need for responsible, sensible cuts without slashes or decimates medicare or medicaid, but -- neil: i know we're talking past each other a little bit here, but even -- whatever the virtue of your comments -- a lot of those entitlements you hold dear, defense, a lot of republicans hold dear, and then you run out of available things to address now. >> there's no easy cuts. on defense spending, i understand as well as anyone else that we've made half a trillion culls to defense spending. there's not a lot more there, and so that focuses the need on cuts elsewhere which can be made without slashing. i understand your point without slashing or decimating medicare. neil: you're optimistic a deal

is made? put you down as likely? >> the hopeful corner. neil: senator, thank you very much. the man who used to be considered early on an economic man to obama, the economist who says, you know, it wouldn't be the worst thing in the world missing the end of the year deadline, especially if it leads next year to a better deal. %-dangerous as you think. after this. ♪ the capitaone cash rewards card gives you 1% cash back on all purchases, plus a 50% annual bonus. and everyone...but her

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>> go ahead and miss the cliff, marx zandi, the economyist with the ear and respect of both parties says it's not the end of the world if we're late on what could prove a better deal that we could score early part of

next year. what do you mean by that, mark? everyone in this town tells me, boy, oh, boy, i guess we got to move, but we're not, end of the year is coming, and you say, chill, why? >> well, i don't think anything happens january 1 #, and if the treasury freezes withholding schedules, then the omb tells government agencies not to change spending patterns because they think a deal is imminent, then the impact is relatively small. it's a matter of confidence, but it's small, and until we're in mid to late january. it's okay to go into next year if it means we get a more comprehensive deal, a deal that a better deal. neil: could be rushed? >> yeah, you know, exactly. i think we need to come up with an agreement that has enough

spending cuts and enough tax revenue that we can feel confident towards the end of the decade we have a debt to gdp ratio that's stable, that would be fiscal stainability, and that would be a good thing, and we're off and running. neil: what's the -- what would be the ratio be? right now with even some of the deals we hear is three to one on tax hikes because a lot is duplicating to what was agreed upon last year. i'm just wondering what the ratio should be to someone like you? >> a good question. a lot depends on the math. we need 10 trillion in three year deficit reduction, and right now $11.4 trillion in tax revenue, 1.6 trillion in spending cuts. it's appropriate to consider the 11.1 -- 1.1 spending control agent, part of the deal achieved -- neil: why should that count

twice? >> yeah, good question. you know, i think we want to be consistent with simpson-bowles, and simpson -- if you do the accounting in simpson-bowles, the end of 2010, that would include bca cuts, and if you did that, we'd get the spending to revenue ratio that would be very consistent with that plan, and that's a good goal for us to achieve. neil: i talked to a number of folks at ratings agencies, including yours, i know you're separate houses there, but who say that a deal built more on tax hikes than spending cuts, real spending cuts, won't save your bacon? in other words, it could lead to a potential downgrade, that a bad deal could do it. what do you think of that? >> yeah. as you know, nemo, i'm not part of the -- neil, i'm not part of the rating education -- neil: understood, understood. >> yeah, my sense of it is if we get the deal i just articulated,

$3 trillion, and now that $3., 1.4 billion and 1.6 billion, i think that fits the criteria for aaa. i don't know for sure, but i think that would fit. consistent with simpson-bowles, and i think that'sed gite post -- guide post at this point. neil: what concerns me is they are as stubborn now as they were in the beginning, maybe for all the right reasons, but i talked to a democratic senator who says don't touch entitlements. republicans who say don't touch defense, and, in fact, don't even address -- republicans say tax rates, we might be open to limiting deductions and the like so there's a lot off the table to each party, and not much time to put something back on the table for either party. what happens? >> yeah, but that's what i would expect. these are big questions, matter a lot to people as they should. neil: i'm worried, questions coming with a couple days to go,

really, do you think they have to have an outline of the deal to go through the process to get one voted on. >> yeah, and i think they will achieve a deal, and i think, you know, the president has to give up more on the spending side and the republicans have to give up more on the revenue side, but i think they are dancing around it, and they will actually get it done before, you know, it becomes a real problem and sign on the dotted line. i think we're actually pretty close so, you know, can't say anything with certainty in regards to that, but feel good how things are going, and don't expect anything less than what the brinksmanship we have right now. it's part of the process. neil: i hope you're right. we want a deal done. mark, we'll see how it works out. if he's right, and in the meantime, michigan trying to be the 24th state with right-to-work laws, and unions are not happy about it expressing their frustration and how it is going to alienate that state's republican governor from

unions. wisconsin ring a bell? a top fundraiser for president obama helped him get re-elected on how that's affecting this entire mood and tone, even here in washington for maybe years out after this. ♪

neil: michigan en route to be another wednesday? could be just as devicive and could be the 24 #th right to work state, but that created enormous tensions prompting the president the united states to visit saying he's against this measure that governor rick snyder supports, and both branches of republican legislature have already passed. that is to give workers the choice whether they want to be a

union or not. union members say it is not that simple, that this is really a trojan horse for dismantling them. don, the adviser to the president of the united states had a big fundraiser for the president helping get him re-elected. don, you're an entrepreneur, a business guy, knows a i think thing a two about how businesses succeed and thrive and pass that along to the president. business guys say there's nothing wrong with this measure, that it is not a union killer, that it's a free choice provider for workers. what do you think of that? >> well, look, i happen to do business in a few different states. one of them is florida, which is a right to work state, and we do business in new york. there's pros and cons for a business person as to whether or %-construction business, whether or not you benefit from union labor or not. without question, it costs more to bill union versus not.

the premise of having workers have the right to make a decision on whether or not they are members of a union or not, i think that's something that no one should be able to argue with. i think that we, in a democracy, we should all be able to make our own choices as to whether or not we're members of the union or not. neil: isn't what that the governors were saying, that, look, these are choices that people can make. if there's a benefit to be in the union, so be it, good for the union. if they do not, so be that too. >> well, if it's that simple, then, yeah, i think that there's nothing wrong with allowing workers to make their own choice. in florida, we've been in an environment in the construction business where it's a right-to-work state, and we had tremendous booms in construction with that kind of scenario. it does work, but then, you know, look at new york where it's a predominant union town and union state, and, you know,

look, things get done efficiently, but it costs more money to bill union, versus nonunion, and the question you have to ask is does it impact on generates more or less jobs? neil: but do you think that the president should make a statement? no one denies that unions helped them over the finish line, passionate crowds feeled owed, and the president feels an obligation to pay them back here, but should he make a statement, as businessmen argued, to stand and say this is one thing i'm just not with you on. i see nothing wrong with free choices. >> i think the president should speak what he think is the right way to do things, speak from his heart, speak, you know, from what his beliefs are. you know, the president, you know, the office, itself, is an office of leadership. the president's a leader, and he should articulate what his views are, and if he does support this ordnance, he should or tick late it, and if he's against it, he should speak out against it as

he would any other issues that would affect a large number of americans, and especially right now where we're having difficulty in our economy generating jobs, and i think any issue in terms of impact on jobs, the president ought to weigh in on. neil: you definitely didn't answer the question making you the proi think you are. don, i want to thank you, again, have a merry christmas if we don't speak again. >> thank you, you too. neil: all right. we're just getting word now harry reid is saying, you know, the idea of getting anything done before christmas, not looking good. camping out here christmas day? looking good. after this. ♪

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